O'Neill v O'Connell [1946] HCA 59

O'Neill v O'Connell [1946] HCA 59 - HCA 1946 case summary — Zoe

[82]

power the validity of the Treaty of Peace Act 1919 and Regulations made thereunder to give effect to the terms of the treaty of peac made at the conclusion of the war of 1914-1918 so as to " wind up" after the war. : In my opinion the Regulations were valid when enacted, and their validity is not affected by the facts that hostilities have ceased and that Germany and Japan have surrendered. There are cases pe before the Full Court in which the effect of the conclusion of host will be considered in relation to certain National Security Regula tions. I would have preferred to postpone my decision until the Court had decided these cases, but I give my decision at once because the plaintiff has pressed for an immediate decision. I answer the questions in the originating summons in the following way: Question 1: No. Question 2: No. Question 3: No. Costs of plaintiff and defendants out of the estate ; those of the executors as between solicitor and client; certify for counsel in the Supreme Court. An application for a mandamus already made and refused by m was renewed by Mr. Ashkanasy on behalf of the plaintiff as pro cutor. The application, after I had refused it, was again made to the Full Court under the Appeal Rules, s. 1, rule 7. The Full Court however, made no order. I refused the application for a mandamu to the Treasurer to consent to the contract of purchase of the by O'Neill for £6,500. The Court cannot, in my opinion, in substitute itself for the Treasurer. I also refused the application for mandamus to the Treasurer to consider and determine th application for his consent. The evidence, in my opinion, showe that the application had been considered and determined in accord ance with law and I was not of opinion that in taking into account the value of the land as at 10th February 1942 the Treasurer taken extraneous matters into consideration. I therefore refuse the application as renewed to me. As the applicant may desire t obtain a decision from the Full Court on the matter, I extend thi time for making an application to the Full Court for one month fron the present date. The application for a mandamus was made parte and there will be no order as to costs.

[104]

confined to the determination of that question because of the limited nature of the original jurisdiction of this Court : See Constitution, 75 and 76, and Judiciary Act, s. 30. It is, however, the cause that removed by s. 40a. 'Once the cause is removed," this Court "is clothed with full authority essential for its complete adjudication: itis the cause which is removed, and not merely the question involving the interpretation of the Constitution " : Of. Hx parte Walsh and Johns In re Yates (1). But the Court must be satisfied that its jurisdi attaches, that the decision on the constitutional question is neo for the adjudication of the rights of the parties. And jurisdi attaches, I gather, at the moment the Supreme Court in the course of its proceedings encounters and not before it encounters the con- stitutional question. The Sanaa Court should not stay its hand until the constitutional question " becomes necessary for the deter- mination of the rights of the parties": See In re Drew (2); R. vy. Maryborough Licensing Court; Ex parte Webster & Co. Ltd. (3); George Hudson Ltd. vy. Australian Timber Workers' Union (4). Both Gavan Duffy J. in the Supreme Court and the Chief Justice of this Court were of opinion that a constitutional question, within the meaning of s. 40a, arose and that its determination was necessary for a complete adjudication of the rights of the parties upon the originating summons. The option gave Daniel O'Neill a right to acquire the prope within a certain time and at a certain sum. It is unnecessary in the present case to consider whether the option gave O'Neill a mere personal right or a right transmissible to his personal representatives or assignees, for he exercised the option in due time: See In re Cousins ; Alexander v. Cross (5) ; Skelton v. Younghouse (6) ; Sharp v. Union Trustee Co. of Australia Ltd. (7). By the exercise of his option O'Neill became entitled, upon pay- ment of the sum mentioned by the testator, to call for a transfer of the land and to an equitable estate or interest therein (London and South Western Railway Co. v. Gomm (8) ). And it would be the duty of the personal representative of the testator to make this transfer in a due course of administration of the testator's estate, e.g., after payment of his debts, funeral and testamentary expenses. This duty arises not from any agreement or contract made by the personal representative of the testator, but from the disposition of the testator coupled with the exercise by Daniel O'Neill of the option given to him.

[134]

intended donee of the option upon terms and conditions stated in the will or to be settled in some manner indicated by the will. But in form the disposition now in question stands between a conditional devise and a direction to propose a contract. It gives an immediate, though innominate, beneficial interest, one of many miscellaneous rights and interests which under the power of testamentary disposition allowed by English law a testato or may create. . In discussing whether the similarly framed option in In re Cousin (1) was transmissible or was exercisable only by the donee, Cotton L.J, refers to the argument that it is property and therefore devolves death as other property. After remarking that the assumption thai all property must last after a man's death is a fallacy, as is shown by the example of a life interest, his Lordship says: "The question is, although this is property, is it such a property as can made valuable at any time after the son's death ? " (2). 7 It is now settled that there is no rule that prima facie such an option is personal to the donee and is not exercisable by his executors, administrators or assigns (Shelton v. Younghouse (3) ). The reasons given by their Lordships in Shelton's Case (3) all show that the di of the option takes on the testator's death an immediate beneficia interest in property. This is well illustrated by the reservati which, in view of the terms employed by Lord Dunedin in Wright v. Morgan (4), Lord Maugham thought fit to make concerning the question whether, before the exercise of an option of purchase con tained in a will, the interest of the donee of the option in the prope is to be considered vested or contingent, scilicet, contingent on h electing to take the estate or interest affected by the option. further Radnor (Earl of) v. Shafto (5); Brooke v. Garrod (6). The donee of the option, by electing to take the property at the price fixed or upon the terms indicated by the will, incurs an equitab duty to perform the condition upon which, under the provisions of the will, he becomes entitled to the property : Cf. Attorney-Gei v. Wax Chandlers' Co. (7) ; Messenger v. Andrews (8). The obliga tion is independent of contract. 3 The exercise of a testamentary option by the donee makes absolute his immediate right to the property, except in so far as the will ma payment of the price or the performance of any other obligation upon him an essential condition. His position becomes, of course

[147]

It is plain that the draftsman of this regulation considered that the use of the wide and indefinite words " dispose of " made it desirable that he should expressly except gifts and dispositions by will. He was drafting a regulation imposing upon the vendors or disponors of property in land a prohibition against imparting property or contracting to do so without the Treasurer's consent. The person penalized was not the person actively acquiring property, but the person actively selling or otherwise disposing of it. To devise pro- perty by will or to exercise a testamentary power is to take active measures for its disposition, to make what on death would become an assurance of the property. It was therefore desirable to make an exception of testamentary dispositions. But by Statutory Rules 1942 No. 425 the policy of laying the prohibition on the vendor or disponor of land and penalizing him was changed and the purchaser or disponee was made the object of the prohibition and of the penal sanctions. The change of policy was restricted to land and reg. 7, dealing with shares, stocks and debentures, was left unaltered in this respect. Regulation 6 (1) provided that a person should not, without the consent of the Treasury, (a) purchase any land, (b) take an option for the purchase of any land, (c) take any lease of land, (d) take a transfer or assignment of any land, or (e) otherwise acquire any land. It will be seen that the corresponding but converse expressions are used. The change necessitated the removal of the exceptions to a separate sub-regulation. But it is clear, as it seems to me, that the prohibition is still laid on active transactions. To be guilty of a contravention it would be necessary to do something as an active agent. To become by the death of another his devisee, legatee, or beneficiary would not naturally be treated as falling within the prohibition, " A person shall not without consent acquire." The exceptions, now set out in the second sub-regulation of the regulation, cover the acquisition of land by way of gift and exclude it from the prohibition. To acquire a legal estate by way of gift involves

[174]

vides that dispositions by way of gift, by will or in the exercise of a power of appointment under a will, are to be an exception from the prohibited dispositions of shares. The inclusion of dispositions will as well as by way of gift shows that the word " gift" when usi in reg. 6 (2) (d) does not include testamentary gifts. In the conte: of the Regulations as a whole it would appear, therefore, that the words " otherwise acquire any land" in reg. 6 (1) should be res ejusdem generis with the provisions which precede and succeed them and that they do not include the devolution of land on death, ani by parity of reason that the acquisition of land by way of gift men- tioned in reg. 6 (2) (2) must refer only to gifts inter vivos. In this connection there are two provisions in reg. 8 which requi consideration. This regulation provides that nothing in this shall prevent (d) the vesting in the personal representative of deceased person, in his capacity as such, of any property or interest in any property, or (f) any transaction which is without consideration in money or money's worth, and the purpose of which is to vest any property, or any interest in property, in any person beneficially entitled thereto under or by virtue of any will or intestacy The first of these provisions appears to assume that under the la ( of each State both the real and personal property of a deceased p son, upon the grant of probate or letters of administration, will v in the personal representative of that person, but does not: deal the equitable interests in property that arise upon death under, instance, a specific bequest of shares or a specific devise of land. The second of these provisions appears to assume that under th laws of each State it is necessary for the personal representative to assent to or execute some instrument of conveyance or transfer of land or shares to the devisee or legatee. The purpose of the word " any transaction which is without consideration in money or mone worth " appears to be to confine the vesting to a transfer of the le and beneficial interest to the person beneficially entitled under th will or intestacy and not to include some other person to whom thi beneficiary has assigned his interest for valuable consideration. The Chief Justice considered that an option given by will purchase property does not in itself and independently of its exercise give an equitable interest in that property, whether or not the ri of the optionee can properly be described as itself being prope and that it is only if the option is exercised, and if in the prop

[176]

do make a contract of sale to the optionee, that the optionee will then under the contract obtain an equitable interest in the property in respect of which the option is given. But, with respect, I am unable to agree with this view. The authorities establish in my opinion that an option to purchase land whether created by an instrument 'inter vivos or by will creates an immediate equitable interest in the land (Oppenheimer v. Minister of Transport (1) ; In re Cant's Estate (2); In re Kerry; Bocock v. Kerry (3); In re Armstrong's Will Trusts ; Graham v. Armstrong (4) ; Commissioner of Taxes (Queens- land) v. Camphin (5); Trustees Executors and Agency Co. Ltd. v. Federal Commissioner of Taxation (6) ). A donee of an option to purchase land given by a will is a beneficiary of that beneficial interest (Re Busby; Busby v. Busby (7)). The executors have as against him the same overriding common law or statutory power as they have against a devisee to sell the land to pay the funeral and testamentary expenses, death duties and debts of the deceased. But the donee of the option is still entitled to exercise the option, and upon such exercise and performance of its conditions to follow the proceeds of sale in the hands of the executors (In re Armstrong's Will Trusts (8)). As Lord Romilly said in Ex parte Hardy (9), referring to a compulsory purchase of land subject to such an option : "The option will remain, whether the fund continues, as it is, in stock, or is reinvested in land." This is because the option creates an equitable interest in the land at the date of death. The donee, therefore, upon exercising the option in accordance with the con- ditions contained in the will, acquires against the executors, irrespec- tive of whether a contract is entered into or not, all the rights intended to be thereby conferred upon him, and if a contract is entered into, it cannot override but will be subject to these conditions (Brooke v. Garrod (10) ). In this case, in the Court below, the option was described by Sir W. Page Wood, as he then was, as a trust to convey the pro- perty to the optionee provided he complied with the conditions of _ the option, and in Radnor (Earl of) v. Shafto (11) Lord Eldon pointed out that the remedy of the optionee would be to bring a suit to administer the trust. Thus, an option has been described by Lord

At a glance

Court

Decision date

Before

Source

Judgment (199 paragraphs)

Dixon J. H.C. oF A. 1945-1946.

Cited By (1)